Question

Jamison Corp.'s balance sheet accounts as of December 31, 2018 and 2017 and information relating to 2018 activities are presented below.

December 31,

2018

2017

Assets
Cash		$ 440,000	$ 200,000

Short-term investments			600,000	—
Accounts receivable (net)			1,020,000	1,020,000
Inventory			1,380,000	1,200,000
Long-term investments			400,000	600,000
Plant assets			3,400,000	2,000,000
Accumulated depreciation			(900,000)	(900,000)
Patent			180,000	200,000

Total assets

$6,520,000

$4,320,000

Liabilities and Stockholders' Equity Accounts payable and accrued liabilities			$1,660,000	$1,440,000
Notes payable (nontrade)			580,000	—
Common stock, $10 par			1,600,000	1,400,000
Additional paid-in capital			800,000	500,000
Retained earnings			1,880,000	980,000

Total liabilities and stockholders' equity

$6,520,000

$4,320,000

Information relating to 2018 activities:
• Net income for 2018 was $1,500,000.
• Cash dividends of $600,000 were declared and paid in 2018.
• Equipment costing $1,000,000 and having a carrying amount of $320,000 was sold in 2018 for $360,000.
• A long-term investment was sold in 2018 for $320,000. There were no other transactions affecting long-term investments in 2018.
• 20,000 shares of common stock were issued in 2018 for $25 a share.
• Short-term investments consist of treasury bills maturing on 6/30/19.

Reference: Ref 23-10

Net cash used in Jamison's 2018 investing activities was

	A.	$1,720,000.
	B.	$1,680,000.
	C.	$1,820,000.
	D.	$2,320,000.

Answer 1

Solution:

Net cash used in Jamison's 2018 investing activities was = Purchase of plant asset + Purchase of short term investment - Sale of equipment - Sale of long term investment

= ($3,400,000 - $2,000,000 + $1,000,000) + $600,000 - $360,000 - $320,000 = $2,320,000

Hence option D is correct.